The Official Blog of the Institute of International Shipping and Trade Law
Author: Associate Professor Andrew Beale OBE
Previously our Acting Head of College Andrew joined us in 2004 as the Director of IP Wales®, our £4m award winning business support initiative.
Originally the Head of Swansea Law School (University of Wales Trinity Saint David) Andrew became the Director of the Swansea Intellectual Property Rights Initiative in 1999. In recognition of its support for Small & Medium Enterprise (SME) use of the IP system the Swansea IPR Initiative became the Winner of the Wales one-2-one Best 4 Business Award in 2000. Andrew was responsible for designing and launching IP Wales® in 2002. IP Wales® was the recipient of the Judges Special Prize at the WORLDLeaders European Awards in 2004. Under Andrew’s leadership over 800 businesses have been assisted to make informed commercial choices about their IP assets helping them to capture and protect over 220 patents, 70 trade marks and 10 design registrations around the World. Support was furnished to over 25 licensing deals (licensing-in & licensing-out) facilitating the commercial use of intangible assets by integrating an intellectual assets (IAs) strategy within the overall business plan.
In recognition of his success in raising levels of awareness and understanding of IP amongst the SME community in Wales Andrew was seconded from 2008-9 to work for the World Intellectual Property Organization (WIPO). Whilst at WIPO Andrew co-organised and presented at the ‘WIPO Forum on Intellectual Property & SMEs for IP Offices of OECD and EU Enlargement Countries’ (2008) in Cardiff, one of the few occasions this prestigious event has been hosted outside Geneva. Andrew achieved National recognition for ‘services to intellectual property and business in Wales’ with the award of an OBE by the Queen under her Birthday Honours List 2009. International speaking invitations have included presenting to the World Intellectual Property Organisation, the World Trade Organisation, the European Commission and the European Patent Office.
Andrew remains as the Director of IP Wales® and was responsible for the validation of our new LLM programme in Intellectual Property and Commercial Practice. Andrew is the module leader for International Intellectual Property Law, the Law of Intellectual Assets Management & Transactions and also lectures 'Oily IP' on our new LLM in Oil & Gas.
Readers of the latest Raconteurs IP Report may be sobered to learn that 28% of IP, Cyber and risk professionals say their “company has experienced a material IP incident over the past two years” – with 42% of those involving trade secrets, as compared to 26% copyright and 24% patents.
The Report goes on to cite the case of Uber acquiring the self-driving startup Otto in 2016. Ben Edwards notes, “[I]t thought it was hiring some of the industry’s smartest engineers; what Uber also purchased was a lesson on the importance of intellectual property.” It transpired Otto’s founder, Anthony Levandowski, had downloaded files from his previous employer, Waymo, before his leaving – a fact Uber had overlooked as part of their acquisition due diligence. Whilst Uber claimed not to have received or used any of Waymo’s trade secrets it ended up paying $245 million in legal settlement.
Tilman Breitenstein (IP Group Leader, BASF) comments in the Report, “There are not many companies that do have a solid trade-secrets programme in place; even if they know they have something, they lack the skills and knowledge of how to protect it…Startups and smaller companies often have a higher fluctuation of staff and that makes it much more difficult for those businesses to protect their trade secrets. They also need to attract investors, which means going out and talking about their business, which also puts them at higher risk.”
The growing importance of considering trade secrets as part of a wider IP strategy for the business is amplified by Maria Anassutzi (IP Lead European Counsel at Canon) in the Report,”[S]ometimes an IP strategy is just thought of as a patent strategy, but it is much more than that.” The Report goes on recognise one common mistake companies make is, “not aligning their IP strategy with their overall business strategy.”
Intellectual property is the area of law used by commercial entities to differentiate their goods and services in the marketplace. One of the ways this differentiation can be achieved is through branding, protected via trademarks. Indeed, one of the essential criteria for a trademark is a sign capable of distinguishing goods and services as a “badge of origin” for consumers.
Richard and Maurice McDonald from San Bernardino, California may have been experts at churning out hamburgers and French fries quickly, cheaply and consistently under their “Speedee Service System”, but they had little if any regard for intellectual property. Working with local craftsmen they invented a new spatula, dispenser (squirting the same amount of ketchup and mustard every time) and rotating platform to speed up the assembly of the burger, bun and condiments, none of which enjoyed patent protection or were appreciated for their trade secrets potential. It was left to the more IP astute Ray Kroc, their milkshake machines salesman, to encourage and expand their domestic franchising operation under the protection of trademarks. After purchasing the McDonald brothers’ equity in the company, Kroc used his control over the trademarking portfolio as the springboard for the global franchising operation we all know today. Ultimately driven out from the fast-food industry by the very business that bore their family name, the McDonald brothers’ story is a salutary lesson in IP astuteness.
UK company number 07033553 tells the tale of two even more famous brothers. Incorporated in 2009 as “The Foundation of Prince William and Prince Harry” following the marriage of Prince William it went on to become “The Royal Foundation of the Duke and Duchess of Cambridge and Prince Harry” in 2012, and following the marriage of Prince Harry “The Royal Foundation of the Duke and Duchess of Cambridge and the Duke and Duchess of Sussex” in 2018. But after Prince Harry disclosed in an ITV documentary that he and his older brother were on “different paths” the company has since reverted to “The Royal Foundation of the Duke and Duchess of Cambridge” (from the 6th September 2019). This company has been IP astute in applying for/registering trademarks to protect its name, as well as “The Royal Foundation” brand. In addition to the UK, trademark protection has been secured as far afield as Australia, Canada and Europe.
The recent decision of the Duke and Duchess of Sussex to withdraw from royal duties may have created a “mini-abdication crisis” but with speculation now turning towards likely future commercial dealings, their trademarking activities are now coming to the fore. So what insights do these trademarking activities offer?
The Duke and Duchess of Sussex have been Directors of “Sussex Royal the Foundation of the Duke and Duchess of Sussex”, a private limited company by guarantee (Company Number 12077679) since its date of incorporation on 1st July 2019. Two UK trademark applications have been made on behalf of this company for “Sussex Royal” as well as protecting the company name.
Following the announcement of the withdrawal from royal duties, two further applications have also now been made under the Madrid system (the system for registering international trademarks in up to 90 countries) in respect of the company name and the brand “Sussex Royal”. It is reported that international trademark applications have been filed under these applications for Australia, Canada, Europe and the United States.
Comprehensive monopoly rights are being claimed
Legal protection has been sought and registered for the Duke and Duchess of Cambridge under “The Royal Foundation” for:-
Clothing, footwear, headgear.
Charitable fund raising; management of charitable funds; financial grant making.
Educational activities; cultural activities; organising of events; publishing, including electronic publishing.
Licensing of intellectual property.
In comparison “Sussex Royal” seeks to duplicate all of these and far more:-
Printed matter; instructional and teaching materials; printed educational materials; printed publications; books; educational books; textbooks; magazines; newspapers; newsletters; periodicals; printed reports; fact sheets; brochures; programmes; booklets; pamphlets; leaflets; manuals; journals; diaries; calendars; posters; art prints; notebooks; postcards; greeting cards; paper and cardboard; photographs; stationery and office requisites, except furniture; artists materials; pens; pencils; book marks; activity books.
Campaigning; promotional and public awareness campaigns; marketing and promotion of charitable campaigns; promoting charitable fundraising events; developing charitable campaigns for others; developing and coordinating volunteer projects for charitable purposes; providing volunteering opportunities and recruitment of volunteers; organising and conducting community service projects; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
Charitable fund raising; management of charitable funds; financial grant services; financing of projects; charitable foundation services, namely, providing fundraising activities, funding, scholarships and/or financial assistance to those in need; charitable collections; management of charitable funds; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
Education; providing of training; sporting activities; cultural activities; arranging and conducting educational events; arranging and conducting of conferences, conventions, exhibitions, classes, lectures, seminars and workshops; organisation of webinars; health and wellness training; education and training relating to nature, conservation and the environment; organising youth training schemes; career and vocational counselling; training relating to employment skills; personal development training; team building (education); organising sporting events and competitions; sports coaching services; providing sports facilities; training of sports coaches; arranging and conducting cultural events; arranging and conducting of entertainment events for charitable purposes; social club services for entertainment purposes; arranging and conducting award ceremonies; publishing; electronic publishing; non-downloadable electronic publications; news reporting; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
Social care services namely organising and conducting emotional support groups; counselling services; emotional support services; provision of personal support services to help, care for and support persons in need, namely companionship services; charitable services, namely mentoring and personal care services; licensing of intellectual property; information, advisory and consultancy services relating to the aforesaid services, all of the aforesaid services also provided online via a database or the Internet.
We await the outcome of these applications, but for the time being at least in those areas (as underlined above) where the work of the respective Foundations overlap consumers should view “The Royal Foundation” as the brand of the Duke and Duchess of Cambridge and “Sussex Royal” the new future brand of the Duke and Duchess of Sussex.
Yesterday’s headline (above) in the Sunday Times is a timely reminder to UK business about the importance of “trade secrets data” as an intellectual asset and the need for clarity as to its meaning.
Up until the Trade Secrets (Enforcement, etc.) Regulations 2018 [the new Regulations] the UK had no statutory definition for what constitutes “trade secrets data”. The common law had previously used the term in one of two ways, either for post-employment restraints legitimately imposed on former employees or meaning technical/business data imparted to the recipient under an express or implied obligation of confidentiality.
In an attempt to catch-up with legislative protection in the USA and Japan, the EU Commission introduced Directive 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure. This Directive used the definition for “trade secrets data” provided for under Article 39.2 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), implementing which the new Regulations state at Section 2 that a “trade secret” constitutes data which:-
“(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among, or readily accessible to, persons within the circles that normally deal with the kind of information in question, (b) has commercial value because it is secret, and (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret;” (emphasis added)
The preamble to the Directive makes clear secret “excludes trivial information and the experience and skills gained by employees in the normal course of their employment, and also excludes information which is generally known among, or is readily accessible to, persons within the circles that normally deal with the kind of information in question.” Further, that data has a commercial value, “where its unlawful acquisition, use or disclosure is likely to harm the interests of the person lawfully controlling it, in that it undermines that person’s scientific and technical potential, business or financial interests, strategic positions or ability to compete.”
However, there is no definitive guidance on what constitutes reasonable steps under the circumstances, although there would seem to be an expectation within the wider legal community that SMEs will not be put to the same legal standard as larger more resourceful corporations (see Trade Secrets – reasonable steps, published in the Journal of the Chartered Institute of Patent Attorneys October 2019 / Volume 48 / Number 10 at 18).
What is clear, however, is the new Regulations offer no protection to UK businesses under the criminal law. Whereas the U.S. Defend Trade Secrets Act 2016 may make it a federal offence to steal trade secrets data, such data is unlikely to even be considered as “property” within the meaning of the UK Theft Act 1968.
The article addresses the reintroduction of the Active Cyber Defense Certainty Act (ACDC) to the 116th U.S. Congress in June 2019 and concludes with the call for a common platform to be agreed on the more aggressive defensive cyber actions (hacking back/Offensive Cyber/legal right to bear cyber arms) that SMEs should and should not be permitted to conduct in defence of trade secrets.
The latest report from the EUIPO and Europol on IP Crime threats assessment makes clear that such threats are viewed as limited to instances of piracy and counterfeiting. Important as these criminal activities may be to threaten the health of our economy such a limited approach is at odds with American jurisprudence where, ”the threat of trade secrets theft to U.S. corporations conducting business internationally is a well-recognized and extensively documented phenomenon”, and “top intellectual property priority” for investigation by the FBI. The United States Trade Representative’s Special 301 Report (2018) goes further by identifying a failure to adequately protect trade secrets by trading partners as a key area of concern, given U.S. government recognition that “trade secrets may constitute the most critical intellectual property assets” for U.S. corporations.
It was for this reason that the U.S. government reported it had been, “extremely active in Brussels in support of the EU trade secrets directive” (2016), using its co-chairmanship of the Transatlantic IPR Working Group to push ”this topic to the forefront on EU action on intellectual property matters”, albeit this legislative initiative was ultimately only limited to the civil law domain.
Work undertaken by the OECD in 2014 recognises that the U.S. leads the world in the legal protection of trade secrets, with the UK struggling to stay above the average – behind the legal jurisdictions of Canada, Lithuania, Spain, Japan, Netherlands, Ireland, Israel, New Zealand, Hong Kong (China), Singapore and Australia. A UN Conference on Trade and Development Report (2011) confirmed over 50% of global trade in services is now undertaken online, with a global fraud report (2010) recording incidents of data theft now surpassing that of physical theft. One area of primary concern highlighted by U.S. Secretary of State Hillary Rodham Clinton in 2012 was,”emerging powers are putting economics at the centre of their foreign policies” and making commercial cyber espionage a central part of their policy toolbox.
During his presidential campaign candidate Trump highlighted the blue-ribbon panel report into the Theft of American Intellectual Property, the updated version of which cites estimates of the value of trade secret theft as between 1% to 3% of GDP. It is sobering to note the Director of the European Centre for International Political Economy would point out, “there is no evidence or indication that cyber espionage against European firms is any lesser in scale than against other countries,” offering an estimation of “the cost of cyber espionage to Europe at 55 billion euros annually (and placing) 289,000 jobs at risk.”
Whereas the UK government would advocate that the solution lies with firms enhancing their own cybersecurity protection, such an approach is likely to become increasingly unrealistic as a holistic solution in the emerging 5G/Industry 4 era, where decades of R&D are susceptible to being ‘hacked’ at the click of the mouse. Calls for parity of criminal law protection with SME counterparts in the U.S. can only be expected to grow within the UK.
With the UK providing notice to leave the EU and looking to build upon its current trading position with the U.S. a parity of criminal law protection against trade secret theft can only offer some reassurance to the U.S., with a trading partner which is currently said to offer better criminal law protection for the boardroom table than the theft of boardroom secrets (Alan Campbell QC 1967).
Welcome though such a legislative initiative might be for our vulnerable SMEs, Europol has already reported that national criminal legislation cannot of itself provide a unilateral solution. With TRIPS now nearing a quarter of a century of operation there are reassuring signs that the U.S., Japan and EU are starting to form a ‘coalition of the willing’ to work together on the margins of the TRIPS Council to elaborate upon the nature of the legal protection to be afforded under Article 39, with a special emphasis on SMEs (side event 9th November 2016).
Europe has been at the vanguard of developments for the legal protection of personal data, the question is whether the appetite now exists to extend the legal protection for valuable commercial data by using the criminal law.
Delighted to see cybersecurity identified as one of the urgent
global legal challenges to be addressed under the Hillary Rodham Clinton
Scholarship programme just launched by Sky and Swansea University (see
No understanding of innovation is complete without an understanding of intellectual property law and as Alec Ross, Senior Advisor for Innovation to Hillary Clinton when Secretary of State, states in his work The Industries of the Future (2016), “We all want the liberty that comes with a vibrant online life, but liberty without security is fragile, and security without liberty is oppressive. The years ahead will force us to balance these two as we have not had to before.”
Sky and Swansea University today announced the first ever global Hillary Rodham Clinton Scholarship programme.
The scholarships will support the next generation of leaders committed to addressing urgent global challenges, including the rights and protection of children online, the climate crisis and cybersecurity.
Each of the scholars will be selected over the summer and
granted a fully-funded, postgraduate, one-year scholarship at Swansea
University, starting in the autumn.
Launching the Hillary Rodham Clinton Global Challenges Scholarship, Secretary Clinton said: “I’m delighted that this partnership between Sky and the School of Law at Swansea will be able to achieve something truly unique, with an urgency that the challenges we face today demand. The programme is a modern, flexible approach which combines the rigour of academic excellence with practical, real world impact. These scholars will embody our shared values of working together across disciplines and geographic boundaries to improve conditions and opportunities for all, and especially for women, children, the marginalised and the disenfranchised.”
Chief Executive, Jeremy Darroch said: “We are honoured to
be the inaugural partner for the Hillary Rodham Clinton Global Challenges
Scholarship and are immensely proud to support a programme so committed to
building a better tomorrow.
“As a society we face a number of global challenges and as
a responsible business we recognise the importance of using our reach and voice
to make a difference in addressing these, making an impact in the wider world,
and helping others do the same. I look forward to welcoming the scholars to the
Sky family and exploring the good we can do together.”
of the Hillary Rodham Clinton School of Law at Swansea University, Professor
Elwen Evans QC, said: “This is a wonderfully exciting
initiative and we are delighted to be working with Sky. These scholarships will
support the delivery of a transformational programme and we hope that our
students will be outward-looking in addressing the big issues. If we are to
tackle the major challenges, such as climate, security, protecting children
online, and inequality, we require innovative thinking and leadership, and a
sustained commitment to transnational cooperation and collaboration.
“This programme capitalises on the considerable research expertise within the Hillary Rodham Clinton School of Law in order to provide students with an incredible opportunity to undertake study into areas of global challenge, and to be equipped with the skills to undertake legal research and to effectively advocate for transformational change to law, policy and practice.”
Reading the IP Wales SME Guide to IP Cybersecurity, underpinned by Beale A., Ratcliffe S., Tettenborn A., The Protection of Data in our Digital Age  Journal of Business Law, Issue 6, 2017 p.461-472, has resulted in each of the following businesses seeking to adopt new methodologies and processes to protect their online commercial activities:-
Benchmark Skincare Limited (Managing Director: Peter Friswell) “By seeking to be certified for Cyber Essentials will enable our business to become “GDPR compliant, protect itself from phising emails, protect itself from external cyberattacks, creating an effective and robust backup data storage process.”
Boyns Information Systems (Director: Robert Boyns) “Reading the IP Wales SME Guide to IP Cybersecurity helped increase our awareness on the importance of cybersecurity in the field intellectual property. As a result, we have adopted new methodologies and processes to allow Boyns Information Systems to grow our cybersecurity infrastructure, whilst protecting us from online harm. Being awarded the IP Wales grant assisted our bid to achieve the Cyber Essentials Plus accreditation, preparing us more fully to mitigate any cyberattack.”
Cadmhas Limited (Director of Services: Elfed Williams) “We are a registered charity and company limited by guarantee and as the Director of Services of CADMHAS I have a duty of care and responsibility to both my Directors, Staff and Service Users that we mitigate the threat of a Cyber Attack. I have spoken to our suppliers Boyns Information Systems Ltd., and they have assured me that by following the 5 pillars of the Cyber Essentials Scheme this will help towards my goal of having a system secured to government guidelines. By having the certification and adhering to it, I will be able to focus on the development of our day to day operations and plan towards the future with a good IT foundation to move forward.”
Castell Howell Foods Limited (Head of IT: Paul Rankin) “Having read the IP Wales SME Guide to Cybersecurity, we decided to increase our protection to Cyber Essentials Plus to reduce the risk of being infiltrated or having data breaches in line with GDPR. With an ever-increasing rise in cybercrime it makes sense to do as much as we can to prevent attacks on our company. I can honestly say that I feel much more confident in our security now and would highly recommend others to carry out this process. Thanks again for considering us for the funding, much appreciated.”
CCTV Wales Limited (Compliance Supervisor: Steve Gallagher) “…to ensure that all customer data and company information is properly protected allowing the company to enhance their service and support Cybersecurity in the area.”
David W.Harris & Co. Solicitors (Practice Manager: Neil Startup) “We are now in the process of undertaking risk analysis and management relating to cyber security. We have updated our internal governance to include more detail on IT security, such as: maintenance of an asset register to include the addition or removal of any assets, Updated IT security and systems policies, Implementation of remote access control, Implementation of a protocol to manage remote devices with access to exchange accounts, Implementation of server password policies, Implementation of automatic screen lock down through user inactivity, Introduction of periodic penetration testing, Password Protection introduced for all electronic documents.”
Daydream Education (Operations Director: Wesley Paetel) “Reviewing and updating all internal cybersecurity awareness and reporting processes, reviewing all third-party anti-virus and malware applications, ensuring system security is reviewed regularly, and reviewing our disaster recovery processes as well as educating staff members about the dangers of cybersecurity and how to become more aware of threats.”
Guardian Property Services Limited (Business Development: Lauren Thomas) “It’s apparent that cybersecurity should be a priority of any business, irrespective of size. Having the right level of knowledge and preparation is vital to minimise and control damage, as well as an understanding of the consequences of a breach and how to recover.”
Health & Her Limited (Marketing Director: Kate Bache) “Collecting, protecting and processing sensitive customer data to improve our understanding in the therapeutic areas of female health, including menopause and menstrual wellbeing.”
Masons Moving Group Limited (Financial Controller: Robert Power) “Protecting the business from online harm is of paramount importance and the Guide has enabled us to implement new security and knowledge to ensure cyber threats are eliminated. These new systems will be monitored frequently and updated when necessary.”
Masons Self Storage Limited (Marketing Manager: James Mason) “The Guide has been extremely helpful in helping our business truly understand the impact cyberattacks can have on a small business. We have ensured brand new office procedures have been put in place with efficient regimes of how we hold and process all types of data.”
PLF Wealth Management Limited (Director: Jeremy Freeman) “Your Guide has made me appreciate the myriad of potential cybersecurity attacks that my small firm has to be aware of, and the steps we as a company need to take to protect our data and network from becoming a victim of these attacks. As a small business our in the financial services arena, we control large amounts of personal data and sensitive data which could make us a viable target to such attacks.”
The Business Centre (Cardiff) Limited (Centre Manager: Emma Mason) “Reading the Guide has given me great knowledge on how to protect our business from online harm. Using this knowledge has enabled us to put new office processes and procedures in place to ensure that we are protected. We have looked closely at how we hold and process our data.”
IP crime is traditionally viewed as counterfeiting (false branding) and piracy (illegal copying) but cybercriminals (& some state players) are increasingly coming to recognise the value of confidential data held by businesses, be it sensitive information about the business operation (trade secrets) or customer information such as passwords and credit card details (made even more topical with the arrival of the EU General Data Protection Regulation 2016).
These attacks on confidential data are happening globally with increasing rapidity and ever more complexity. Zero-day vulnerabilities (where hackers have discovered and exploit a software security breach before a fix is available) are increasing exponentially.
In response our award-winning business support initiative IP Wales has launched a new Online Initiative 2017-2020, the aim of which is to help small/medium sized enterprises (SMEs) to protect their IP from online threats.
SMEs are particularly vulnerable to cyberattack, with our research (commissioned by the Welsh Government) showing that many take little or no precautions against cyber threats, in the mistaken belief that they are too small to attract the cybercriminal’s attention, or that they don’t possess any data worth stealing. Examples of cyberattacks on SMEs have included:-
• IP ‘Theft’ (i.e. trade secrets), the loss of which seriously undermines a company’s attractiveness to both investors and prospective buyers of the business.
• Ransoming of Data, where the business is coerced into paying off hackers in order to retrieve or access stolen or encrypted data.
.• ‘Theft’ of Customer Data (including payment details) which exposes the business to lawsuits, regulatory fines for improper handling of personal data, and reputational damage.
Our website www.ipcybersecurity.co.uk is dedicated to helping SME Boards of Directors to better understand and better protect their business from this increasing threat of IP cybercrime. It also acts as a repository for our research into emerging trends in Cyber-Risk oversight, offering free Briefing Guides for the IP Service Community (IP active Solicitors and Patent Attorneys) on:-
In giving evidence to the Public Accounts Committee (PAC) on Cybersecurity in the UK Sir Mark Sedwill (Cabinet Secretary, Head of the UK Civil Service and UK National Security Advisor) asserted, “the law of the sea 200 years ago is not a bad parallel” for the “big international question” of cyberspace governance today (see Public Accounts Committee Oral evidence: Cyber Security in the UK, HC 1745 [1st April 2019] Q93).
In making this assertion Sir Mark may have had in mind articles such as Dr. Florian Egloff’sCybersecurity andthe Age of Privateering: A Historical Analogyin which the author asserted: 1. “Cyber actors are comparable to the actors of maritime warfare in the sixteenth and seventeenth centuries. 2. The militarisation of cyberspace resembles the situation in the sixteenth century, when states transitioned from a reliance on privateers to dependence on professional navies. 3. As with privateering, the use of non-state actors by states in cyberspace has produced unintended harmful consequences; the emergence of a regime against privateering provides potentially fruitful lessons for international cooperation and the management of these consequences.”
In our IP Wales Guide on Cyber Defence we note: “Since 2004, a UN Group of Governmental Experts (UN GEE) has sought to expedite international norms and regulations to create confidence and security-building measures between member states in cyberspace. In a first major breakthrough, the GGE in 2013 agreed that international law and the UN Charter is applicable to state activity in cyberspace. Two years later, a consensus report outlined four voluntary peace time norms for state conduct in cyberspace: states should not interfere with each other’s critical infrastructure, should not target each other’s emergency services, should assist other states in the forensics of cyberattacks, and states are responsible for operations originating from within their territory.
The latest 2016-17 round of deliberations ended in the stalling of the UN GGE process as its members could not agree on draft paragraph 34, which details how exactly certain international law applies to a states’ use of information and communications technology. While the U.S.A. pushed for detailing international humanitarian law, the right of self-defence, and the law of state responsibility (including the countermeasures applying to cyber operations), other participants, like China and Russia, contended it was premature.”
Indeed China has gone further and condemned the U.S.A. for trying to apply double standards to the issue, in light of public disclosures of spying by their own National Security Agency (NSA).
Sir Mark went on to reveal that because cyberspace governance is being only partly addressed through the UN, “we are looking at coalitions of the willing, such as the OECD and some other countries that have similar systems to ours, to try to approach this.”
Evidence of this strategy in operation can be seen at Ministerial Council Meeting of the Organisation for Economic Co-ordination and Development (OECD) on the 22nd May 2019 when 42 countries adopted five value-based principles on artificial intelligence (AI), including AI systems “must function in a robust, secure and safe way throughout their life cycles and potential risks should be continually assessed and managed.”
The recently created UK National Cyber Security Centre (NCSC) has sought to give substance to this principle through offering new guidance on cybersecurity design principles. These principles are divided into five categories, loosely aligned with the stages at which a cyberattack can be mitigated: 1. “Establishing the context. All the elements that compose a system should be determined, so the defensive measures will have no blind spots. 2. Making compromise difficult. An attacker can target only the parts of a system they can reach. Therefore, the system should be made as difficult to penetrate as possible. 3. Making disruption difficult. The system should be designed so that it is resilient to denial of service attacks and usage spikes. 4. Making compromise detection easier. The system should be designed so suspicious activity can be spotted as it happens and the necessary action taken. 5. Reducing the impact of compromise. If an attacker succeeds in gaining a foothold, they will then move to exploit the system. This should be made as difficult as possible.”
Alec Ross (Senior Advisor for Innovation to Hillary Clinton as U.S. Secretary of State) warns that, “small businesses cannot pay for the type of expensive cybersecurity protection that governments and major corporations can (afford)” A Ross, Industries of the Future (2016). It remains to be seen to what extent cybersecurity design principles will become a financial impediment to small business engaging with AI developments in the near future.
Amongst other criteria, Article 2 of the Regulation targets an actual or attempted cyberattack on IP which has a, potentially, “significant effect”, on the “loss of commercially sensitive data”. Such commercially sensitive data will fall within the definition of a ‘trade secret’ under Council Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure [8 June 2016] if that data: 1. is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; 2. has commercial value because it is secret; 3. has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
Article 3 of this new Regulation imposes an asset freeze on natural or legal persons, entities or bodies who are responsible for the actual or attempted cyberattack; provide financial, technical or material support for or are otherwise involved in the cyberattack; or are associated with the natural or legal person, or bodies involved. As a result of such an asset freeze, all funds and economic resources belonging to, or controlled by, such listed persons and that fall under EU jurisdiction (e.g. held by EU banks) will be frozen. In addition, no funds or economic resources may be made available to or for the benefit of the said listed person by parties falling under EU jurisdiction.
This latest EU Regulation should serve to remind us that the “big international question” of cyberspace governance still remains to be resolved, albeit Sir Mark Sedwill (Cabinet Secretary, Head of the UK Civil Service and UK National Security Advisor) would note that the major private sector providers are more receptive than ever to its resolution (see Public Accounts Committee Oral evidence: Cyber Security in the UK, HC 1745 [1st April 2019] Q93).
In his articleJurisdiction In Cyberspace: A Theory of International Spaces Darrel Menthe asserts that, “unless it is conceived of as an international space, cyberspace takes all of the traditional principles of conflicts-of-law and reduces them to absurdity.” Akin to the “law of the flag” on the high seas, nationality of a vessel (manned or unmanned) in outer space or the nationality of the base in Antarctica, Menthe advocates, even in the absence of such a sui generis treaty regime as regulates the other three international spaces, that jurisdictional analysis requires cyberspace should be treated as a fourth international space governed by a comparable set of default legal rules (see Darrel Menthe, Jurisdiction In Cyberspace: A Theory of International Spaces 4 MICH.TELECOMM.TECH.L.REV 69 (1998)).